F1042 AUDIT

Question 1

What is F1042

Answer 1

Withholding tax return for US source income of Foreign Persons

Question 2

Main issue

Answer 2

• Kraft found to be a withholding agent
• as withholding agent Kraft responsible and liable for withholding of tax on any US source payments to foreign persons
• was there failure to withhold

Question 3

W-8ECI

Answer 3

Foreign person claim that payments received are ECI and not subject to withholding

Question 4

W-BEN

Answer 4

Claim by foreign persons that payments received, whether ECI or non-ECI are not subject to withholding or subject to a lower rate of withholding due to tax treaty between US and the country in which the foreign person is a resident

Question 5

What is ECI

Answer 5

Income received
- while engaged in a U.S. trade or business, such as perform services in the US